Find weighted average cost of capital - dividends, Corporate Finance

Duke Power Corporation has $500 million (face value) of zero-coupon bonds, which will provide 6% return to the bondholders and will mature after 10 years. The stockholders of the company expect a growth rate of 3% in dividends, and a dividend of $3.00 next year. With 30 million shares of common stock outstanding, it is currently selling for $50 a share. Duke Power has a tax rate of 35%. Find its WACC.

Answer: 8.20%

Posted Date: 3/8/2013 5:08:05 AM | Location : United States







Related Discussions:- Find weighted average cost of capital - dividends, Assignment Help, Ask Question on Find weighted average cost of capital - dividends, Get Answer, Expert's Help, Find weighted average cost of capital - dividends Discussions

Write discussion on Find weighted average cost of capital - dividends
Your posts are moderated
Related Questions
you have just been hired as a financial managher of a company that moulds bricks.the firm does not have a proper corporate governance structure.you ar to advice board of directors


The first part requires you to prepare a basic master budget. The general description is provided in Part A, in this document. However the data for the assignment is to be obtained

A firm announces its intent to undertake a levered recapitalization, issuing debt to repurchase a fraction of the outstanding common stock. Upon the announcement, its stock price

Question: (a) As the cost of capital is an essential element of investment appraisal, its calculation must be undertaken with care. Failure to do so could lead to adverse cons


XYZ Corporation has the following capital structure: 10 million shares of common stock selling at $12 each, with current dividend of $1.00 annually; $70 million (face value) of 8%

Question: The National Coach Company (NCC), where you work as Marketing Manager, has agreed on a market development strategy. A key objective is to encourage 40% of car drivers

What significant trends do you see in the future for our industry? Ans) You will be fully well-known with the economic situation as it relates to banking or how recent legislati

i have a project due on the cost of capital for a specific company 3500 word limit, can you help me